Keeping In Touch

Corporate alumni networks are an increasingly valuable resource for employees and employers alike.
Kate O'SullivanDecember 2, 2005

When Dick Bruder founded the Cincinnati Consulting Consortium Ltd. in 1999 after working in finance at Procter & Gamble for 35 years, his earliest marketing efforts targeted his fellow P&G alumni. One of them, Robert S. Morrison, was the chairman, president, and CEO of Quaker Oats Co. at the time (he is now chairman and CEO at 3M). Morrison hired Bruder’s firm to help Quaker with an information-technology project. The assignment lasted several years, bringing an important revenue stream to Bruder’s new company.

Since then, Bruder’s consultancy, which is stocked with other P&G alums, has thrived through similar connections with his former colleagues. “One of my main marketing thrusts is contacting former P&G people, because they have worked with most or all of the people in my group,” says Bruder. “They know what they’re getting.”

Such connections are a big reason why, two years after he started his consultancy, Bruder helped found the P&G Alumni Network. And like Bruder, an increasing number of executives are realizing that networking with former colleagues can lead to opportunities ranging from job offers to business prospects.

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Employers themselves are beginning to see value in keeping in touch, too. “Companies used to say, ‘Don’t let the door hit you on the way out,’” says Kathi Jones, executive director of the Microsoft Alumni Network (MSA). “Nowadays, a company that does that is really missing out.”

Making It Official

While P&G alums had been meeting informally to socialize for years, it was an appearance by company CEO A.G. Lafley at one of the group’s gatherings in Chicago in 2000 that inspired Bruder and five longtime colleagues to broaden and strengthen the network. “When A.G. appeared, it generated a lot of enthusiasm,” says Bruder. “Several of us thought there might be an opportunity to expand the P&G alumni group into a multifunctional, global group, and that there could be some commercial benefits.” The network now has more than 10,000 members worldwide.

Tony Audino launched MSA with a similar motivation. Audino, who held finance and marketing positions at Microsoft from 1987 until he left in 1994, funded the start-up of the network in 1995, “partly for altruistic reasons and partly for capitalistic reasons,” he says. He admired the energy of his Microsoft colleagues and guessed that, if directed toward a charity, the group could do a lot of good. But he was also starting up a new venture firm, Voyager Capital, and was looking for good ideas to fund. “The people I worked with at Microsoft were some of the brightest, most self-directed, hardest-working people I’d ever met,” he says. “I thought I should keep in touch with them, because I thought they would start new businesses.” Voyager has since backed several companies run by Microsoft alums.

Both P&G’s and Microsoft’s alumni associations are hybrids of a sort: they are independent, but they grow and flourish with the blessing of those companies. Other organizations, like consulting firm McKinsey & Co. (regarded as setting the gold standard in alumni networking) and accounting firm Ernst & Young, run their alumni networks in-house. Professional-services firms have been quicker than most to recognize the importance of keeping in touch with alums, in part because the businesses are so driven by relationships, speculates Helen Walsh, E&Y’s director of alumni relations for the Americas.

Other types of companies, Microsoft and P&G among them, are catching on. When Audino launched MSA, he sought and received Microsoft’s approval to use the company name. But that was the extent of the software giant’s interest in the alumni group. Today, things have changed. “Over time, Microsoft has grown to see the value in having a connection with the alumni organization,” says Audino. The company offers the more than 6,000 members of MSA access to its products at the discounted employee rate, thus ensuring itself a large group of Windows devotees. And the sheer size of the alumni network means discounted auto and home insurance rates as well.

“This isn’t a society where people retire from one company with a gold watch after 30 years,” says Jones. “But companies need to be smart enough to know that a resource is a resource, whether the person is external or internal.” One indicator of this new mind-set is the success of SelectMinds, a New York–based company founded in 2000 to help companies establish and maintain alumni networks. It now boasts 45 clients, including Accenture and CapitalOne.

A Two-Way Street

Many alumni organizations now provide an extensive array of services along with the typical alumni directory. E&Y, which employs close to a dozen full-time staffers to manage alumni relations, invites alums to participate in company-sponsored professional education and seminars. At a recent conference focused on the energy industry, 28 percent of attendees were alumni, reports Walsh. The company also invites former staffers to listen in via Webcast to discussions of important accounting changes, and it accepts job postings from alumni looking to hire.

Clearly, alumni benefit from the networking and professional-development opportunities available from their former employers and colleagues. But what’s in it for E&Y? “Because we’re maintaining the relationship,” says Walsh, “we hope that at some point [alums] will consider E&Y again.”

The substantial cost savings that comes with rehiring former employees is perhaps the best reason for a company’s keeping in touch. Walsh notes that over the past three years, 25 percent of E&Y’s hires at the manager level and above have been so-called boomerangs, or returning employees. The firm’s internal studies have shown that these rehires tend to stay longer and perform well the second time around.

Microsoft also benefits from rehiring, and sees some 20 percent of its alums return to its Redmond, Washington, home. It has formalized its process of alumni recruiting by creating a link on the MSA site to the company’s in-house recruiters; applications of former employees go into a special queue. Rehiring can cost as much as 50 percent less than bringing in someone new, according to SelectMinds.

Referral business also makes it worthwhile for a company to maintain ties to former employees. For example, when a Deloitte & Touche partner or senior manager leaves and becomes a CFO elsewhere, chances are good that he will consider audit or tax services from his old firm. In one recent year, Deloitte booked significant revenue from alumni referrals.

Finally, companies realize that employees can serve as goodwill ambassadors in the marketplace, recommending the company’s products as well as referring business and job candidates and generally supporting the brand. “Companies are saying, ‘Why not embrace this group of people and help them carry the flag?’” says Audino. “We want them to use our products and services and say great things about the company.”

Kate O’Sullivan is staff writer at CFO.

Beyond the Rolodex

Companies aren’t alone in trying to get old colleagues together. A crop of social networking companies has sprung up in the wake of the Internet bubble: LinkedIn, Plaxo, Friendster, and others all aim to connect former co-workers and friends through their Websites. Once a user registers with one of the sites, he or she can search for contacts already in the network and invite others to join.

“The most popular activity on LinkedIn is to reconnect with old colleagues,” says co-founder Konstantin Guericke, who says users can enter a company name and the dates of their tenure and find other users who overlapped with them.

The company is marketing the site as a tool for recruiting and business development. “If you’re looking for a director of finance with a specialty in Sarbanes-Oxley, you can look for people with those specifications in your region,” says Guericke.

Some 14,000 CFOs have joined LinkedIn, along with 25,000 controllers and finance directors. And numerous alumni organizations, including those of such top business schools as The Fuqua School of Business at Duke University and the University of California, Berkeley’s Haas School of Business, have created networks on the site. — K.O’S.

CFOs on the Move

Baker Hughes CFO G. Stephen Finley is retiring from the oil services firm in MarchÂÂ…. Computer Sciences has promoted Michael Keane, former VP of finance, to the top finance job…. Kevin Twomey is the new finance head at Rite Aid after a promotion from the chief accounting officer positionÂÂ…. Mary Dridi has left software purveyor WebMethods to become CFO at BuySafe, a company that bonds online merchants…. Steakhouse chain Morton’s Restaurant Group has promoted CFO Thomas Baldwin to the CEO spot upon the retirement of Allen Bernstein…. Denise Fletcher, onetime CFO of MasterCard International, is the new EVP of finance at Paul Allen’s investment firm, Vulcan…. Denise Wilder Warren takes over as CFO at Capella Healthcare…. Data provider Choicepoint has promoted David Trine from controller and treasurer to CFO. Former finance head Steven Surbaugh is now chief administrative officer…. Domino’s Pizza has tapped L. David Mounts, a former corporate controller at United Parcel Service, to lead the finance department…. Marianne Parrs succeeds Christopher Liddell as CFO at International Paper.